Affordable Care Act
What Senator Cruz’s Amendment Could Mean for Health Insurance Shoppers
Published on July 13, 2017
A new version of the United States Senate’s health reform bill was publicly introduced on July 13, 2017 and it includes components of a proposed amendment sponsored by Senator Ted Cruz (R-TX) which is intended to attract more support to the bill.
Cruz has called his amendment the “Consumer Freedom Amendment,” but what exactly is it about? And what would it mean for consumers if it were included in the final bill?
Rolling back regulations to broaden the variety of health plans
Under certain circumstances, Senator Cruz’s amendment would allow health insurance companies off the hook from two key Obamacare regulations:
- The 10 “Essential Health Benefits” requirement – This is the Obamacare rule requiring all major medical health insurance plans to provide coverage for a federally-defined set of health benefits – including maternity care, brand-name prescription drugs, mental health care, and preventive medical care, among others.
- Community rating of monthly premiums – This is the Obamacare rule requiring all people of the same age in the same geographical area to be charged the same monthly premium for the same health insurance plan. No one is charged more based on his or her personal medical history.
With Cruz’s amendment, every health insurance company participating in the health insurance market must offer at least one plan that complies with these Obamacare requirements.
However, once they do, they would also be able to offer plans with reduced health benefits, or plans that base your monthly premiums on your personal medical history.
This could significantly broaden the variety of health insurance plans available in the individual and family health insurance market.
The pros and cons of allowing more flexible benefits
Let’s look at some of the pros and cons when it comes to allowing health insurance companies to offer plans with more flexible benefits:
- Pro: Flexible benefits may increase affordable options for young people – Many consumers find themselves priced out of coverage in the Obamacare health insurance market as we know it today. A recent report from eHealth found that projected costs for 2018 would make coverage officially unaffordable for a majority of families. There are plenty of young people who may want very affordable coverage that’s only going to protect them in the case of a serious illness or injury. If they could purchase a plan with less preventive medical coverage, they could possibly save money on their monthly premiums.
- Pro: Flexible benefits may increase affordable options for many older people too – Older Americans could likewise save money on insurance if they could buy plans that don’t get benefits they don’t need. For example, older couples may prefer to enroll in a plan that doesn’t include things like maternity coverage of drug and alcohol treatment.
- Con: People with more health care needs may face higher costs – There’s a concern that these stripped down plans with more restricted benefits will attract most of the younger or healthier people, leaving the sicker and older people in the richer, Obamacare-compliant health insurance plans. This could skew the risk pools that insurers use to determine monthly premiums, and increase the cost of coverage under more robust plans for people who need that coverage most.
The pros and cons of doing away with community rating
Now let’s look at some of the possible pros and cons when it comes to allowing insurance companies to do away with community rating and charge people based on their health history:
- Pro: Healthy people may be able to get more affordable coverage – With community rating, people who are healthy help take some of the cost burden for people who are sick. When healthy people are allowed to purchase coverage based on their own personal medical history, however, they may find that their monthly insurance premiums are lower than they were under community rating rules.
- Con: People with pre-existing medical conditions may need to pay more – The converse here is that people who have chronic health conditions or serious past diagnoses may come to make up a greater share of the insured population in community rated plans, which in turn could potentially increase monthly premiums under these plans beyond what they were when everyone fell under community rating rules.
So, is the new version of the Senate bill an improvement, and how will we know?
When the Congressional Budget Office (the CBO) scores the new version of the bill, it will provide some insight into these questions – though guidance issues by the CBO is limited.
It’s worth pointing out, however, that in order to address some of the cons outlined above, the latest version of the Senate health reform bill includes billions of dollars to help offset potential cost increases for people with chronic health conditions and others who choose to remain enrolled in more robust Obamacare-compliant plans.
All eyes on the Senate
The Senate is still debating the final form of their health reform bill and we don’t expect a vote for at least another week or two.
Even if the Senate manages to pass a bill, that bill will need to be reconciled with the health reform bill passed by the House of Representatives before it can be sent to President Trump’s desk.
No one can say precisely what the future of health reform will look like in the days and weeks to come, but you can be sure that we’re keeping close watch on developments.